Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Net neutrality and Antitrust

with 4 comments

The European Commissioner for the Digital Agenda, a certain Neelie Kroes,  is now in charge of dealing with European policy with regards to net neutrality.  This hot issue, which is now her current priority (for her latest speeches on this subject see here and here), is the subject matter of a Commission´s Report she presented to the European Parliament on April 19th.

Net neutrality activists have  heavily criticized the Report alleging that it endorses a “wait and see” approach in spite of the identification of alleged instances of blocking or throttling of certain types of traffic.  The Report states that the Commission and BEREC are currently investigating those alleged practices and that “[i]n this regard, the Commission reserves its right to assess under Articles 101 and 102 of the TFEU any behaviour related to traffic management that may restrict or distort competition“.  One should however note that the Report doesn´t exclude the possibility that an ad hoc regulatory framework might be adopted.

On the other side of the Atlantic the debate on the interface between antitrust and regulation on this same area is also a “trending topic”.  Speaking last Thursday before a Subcommittee of the US Congress, the President of the US Federal Communications Commission expressed his views on this debate stating that:

“while critically important, antitrust laws alone would not adequately preserve the freedom and openness of the Internet or provide enough certainty and confidence to drive investment in our innovation future.

 (…) antitrust enforcement is expensive to pursue, takes a long time, and kicks in only after damage is done. Especially for start-ups in a fast-moving area like the Internet, that’s not a practical solution”.

He also replied to the Republican´s party proposal to enact specific antitrust laws to regulate internet neutrality:

“Some have suggested that Congress adopt new antitrust laws addressing Internet openness. But that too would be a problematic approach, ill-suited to the fast-changing nature of Internet technology. As the Supreme Court has pointed out, while statutes are hard to change in light of new developments in network technology or markets, expert administrative agencies have flexible processes for dealing with the unexpected and are, accordingly, better suited for handling this particular issue”. (See here for his complete statement).

At first sight, my -rather simple- take is that  if there really were a need for intervention (not having devoted time to this issue I wouldn´t dare to express an opinion on this point) antitrust and regulation could play together and should be seen as complements rather than as substitutes (although that´s certainly much easier to say in the EU in light of case law such as Deutsche Telekom than in the EU, where the Supreme Court´s Decision in Trinko enormously complicates antitrust challenges to practices already subject to regulation on the part of the FCC).

This could be an interesting topic a discussion and we haven´t paid much attention to it here. We´d be glad to open the floor to any of our readers who might have some more developed thoughts on it. Anyone?

Written by Alfonso Lamadrid

11 May 2011 at 10:06 pm

4 Responses

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  1. Just a brief comment, this is nothing new. They call it net neutrality but it is based on the same underlying economics of mobile termination. That is, EU regulators, consultants and regulated firms have been dealing with this sort of issues for at least more than a decade by now – the debate was kicked-off with the two companion papers written by Tirole/Laffont in 98.

    It is new in the States since they didn’t have to deal with mobile termination, given that they have Receiving Party Pay interconnection model, whereas we have Calling Party Pay.

    This in turn might explain why we are more relaxed about it, and why the operators are the one calling for ex-ante regulation, as they perfectly now they can live and thrive with that, whilst preventing ex-post enforcement which would be pretty straightforward – not to mention that their proposal for a coordinated initiative smells of an attempt to solve a Prisoners’ dilemma…..

    Paolo Siciliani

    11 May 2011 at 11:06 pm

  2. Actually, it dates back to common carriage, which is Roman law, and network regulation dating back to the Railways Regulation Act of 1844 – the competition angle is a smokescreen, and you need to delve into Von Hippel’s work as well as Economides to unravel the economic aspects. On the law and policy, see Marsden (2010) Net Neutrality: Towards a Co-regulatory Solution, as well as my blog.
    Good to know net neutrality is attracting some ‘mainstream’ attention – keep up the good work!

    Chris Marsden

    12 May 2011 at 12:11 pm

    • In defence of the blog’s authors, I don’t think they are “mainstream” as you seem to mean it (in a pejorative sense). Competition law as you probably know is a general piece of law, so the expert in competition law approaches specific issues always as a novice at the beginning (with is one of the reasons why this specific field is fun), so I guess it was unfair to characterise them as “mainstream”.

      Paolo Siciliani

      12 May 2011 at 6:30 pm

  3. I meant mainstream as a compliment…

    Chris Marsden

    12 May 2011 at 11:36 pm


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